Asahi Kasei Q1 Operating Profit Climbs 52% to ¥81.3 Billion as Net Profit Nearly Triples

Asahi Kasei Corporation (TSE: 3407), the Tokyo-based diversified group spanning chemicals and fibres, homebuilding and pharmaceuticals, reported consolidated results for the first quarter of the fiscal year ending March 2027 — the three months from April 1 to June 30, 2026 — under Japanese GAAP. Net sales rose 11.9% to ¥826,157 million from ¥738,321 million, operating profit rose 51.5% to ¥81,305 million from ¥53,653 million, ordinary profit rose 70.8% to ¥85,330 million from ¥49,957 million and profit attributable to owners of the parent rose 172.7% to ¥53,766 million from ¥19,716 million. Basic earnings per share were ¥39.73 against ¥14.52; no diluted figure was reported. Comprehensive income of ¥78,774 million compared with a loss of ¥7,386 million a year earlier, for which the report shows no percentage change.

Material segment profit more than doubled and led the operating gain

All of the operating improvement and most of the revenue growth came from two of the three reporting segments. Material — the chemicals, fibres, electronics and separator businesses — lifted external sales 13.8% to ¥360,158 million from ¥316,576 million and segment profit 160.4% to ¥38,809 million from ¥14,905 million, taking its margin on total segment sales from 4.7% to 10.7%. Health Care grew external sales 23.0% to ¥190,787 million from ¥155,126 million and segment profit 31.4% to ¥29,760 million from ¥22,654 million. Homes was the exception: external sales edged up just 3.3% to ¥267,560 million while segment profit fell 9.7% to ¥20,176 million from ¥22,353 million. The "Other" grouping — plant and environmental engineering, research and information services and staffing — contributed external sales of ¥7,652 million and profit of ¥296 million, both slightly below the prior year. Reportable segment profit therefore reached ¥88,745 million against ¥59,912 million, from which corporate expenses of ¥8,051 million (¥6,081 million a year earlier) were deducted and an intersegment elimination of ¥315 million added, leaving the reported ¥81,305 million operating profit.

Below the operating line, non-operating income rose to ¥13,545 million from ¥6,753 million, the single largest swing being ¥4,956 million of foreign-exchange gains where none were recorded a year earlier; equity-method investment income doubled to ¥2,081 million from ¥1,040 million and interest income reached ¥3,535 million from ¥2,419 million. Non-operating expenses fell to ¥9,520 million from ¥10,449 million even as interest expense rose to ¥3,837 million from ¥2,803 million. That is why ordinary profit grew 70.8% against operating profit's 51.5%.

A ¥36.4 billion pile of extraordinary losses a year ago has all but vanished

The gap between the 51.5% operating gain and the 172.7% net gain is almost entirely explained below the ordinary line. In the year-earlier quarter Asahi Kasei booked extraordinary losses of ¥36,429 million, of which ¥29,880 million was business structure improvement expenses — a figure that included a ¥1,315 million impairment on resin raw-material and coating-agent production equipment in the Material segment — alongside ¥4,196 million for the cancellation of an electricity contract, ¥1,600 million of losses on disposal of fixed assets and ¥753 million of impairment. This quarter the equivalent line was just ¥1,542 million: ¥1,139 million of disposal losses, ¥350 million of business structure improvement expenses and ¥54 million of impairment, with no electricity-contract charge at all. The prior-year base was, in other words, depressed by roughly ¥34.9 billion of charges that did not repeat, which is also why that quarter's net profit had itself fallen 42.2%.

Extraordinary gains moved the other way, falling to ¥2,670 million — ¥2,320 million on sales of investment securities and ¥350 million on sales of fixed assets — from ¥12,243 million, which had included ¥7,483 million from the sale of affiliate shares and ¥4,338 million of settlement money received. Netting the two, pre-tax profit rose 235.5% to ¥86,457 million from ¥25,771 million. The tax line then absorbed part of that: income taxes of ¥30,317 million against ¥4,747 million lifted the effective rate to 35.1% from 18.4%, and non-controlling interests took ¥2,373 million against ¥1,308 million. The result is a bottom line that grew 172.7% rather than the 235.5% recorded before tax. Because the company uses the special quarterly method of estimating an annual effective tax rate and applying it to quarterly pre-tax profit, the tax charge reflects a full-year estimate rather than a period computation.

The AiCuris acquisition added ¥318.8 billion of assets and pushed the equity ratio down

Total assets grew ¥318,848 million, or 7.7%, to ¥4,456,791 million from ¥4,137,943 million at the March year-end, while shareholders' equity rose only 1.4% to ¥2,116,889 million. That asymmetry is the whole reason the equity ratio fell to 47.5% from 50.5% even though equity itself increased: the balance sheet expanded roughly five times faster than the equity supporting it. Net assets ended at ¥2,196,726 million against ¥2,165,647 million and net assets per share at ¥1,572.45 against ¥1,539.66.

The expansion was funded by debt and driven by one transaction. On April 17, 2026 Asahi Kasei completed the acquisition of AiCuris Anti-infective Cures AG, a German anti-infective drug developer, newly consolidating it and five of its subsidiaries. Health Care segment assets rose ¥160,325 million against the previous year-end as a result, goodwill increased ¥44,573 million from the deal — a provisional figure, since the purchase price allocation was not complete at the quarter-end — and on the balance sheet goodwill climbed to ¥424,389 million from ¥383,805 million while technology-related assets jumped to ¥434,935 million from ¥294,854 million, lifting total intangibles ¥179,210 million to ¥1,097,075 million. Deferred tax liabilities rose in step, to ¥98,392 million from ¥58,482 million. Inventories added a further ¥76,221 million, with finished goods at ¥410,056 million, work in process at ¥248,416 million and raw materials and supplies at ¥211,474 million. On the funding side, short-term borrowings nearly doubled to ¥197,506 million from ¥99,926 million, commercial paper went from nil to ¥88,000 million and bonds rose to ¥307,500 million from ¥250,000 million, taking total liabilities up ¥287,769 million to ¥2,260,065 million.

An inventory build and the acquisition outflow reshaped cash flow

Operating cash flow slipped to ¥14,254 million from ¥16,660 million despite pre-tax profit more than tripling, because working capital absorbed the difference: inventories consumed ¥73,250 million against ¥28,488 million a year earlier and accrued expenses a further ¥34,498 million, leaving a sub-total of ¥26,977 million against ¥35,547 million. Income taxes paid fell to ¥13,458 million from ¥20,017 million. Investing activities used ¥195,535 million against ¥13,995 million, dominated by ¥131,681 million to acquire subsidiary shares accompanying the change in the scope of consolidation plus ¥55,688 million of property, plant and equipment. Financing activities therefore turned strongly positive, providing ¥185,969 million against a ¥8,992 million outflow: a ¥138,602 million net increase in short-term borrowings, ¥88,000 million of commercial paper and ¥57,500 million of bond issuance, against ¥46,867 million of long-term debt repayment, ¥29,912 million of dividends and ¥17,867 million spent on treasury stock. Cash and cash equivalents ended the quarter at ¥382,805 million, up ¥10,736 million from ¥372,068 million at the start of the year and marginally above the ¥380,595 million recorded a year earlier.

Full-year guidance untouched; first-half plan published for the first time

Asahi Kasei left its full-year plan for the year to March 2027 exactly as issued on May 12, 2026: net sales of ¥3,254,000 million (+5.8%), operating profit of ¥248,000 million (+7.3%), ordinary profit of ¥247,500 million (+7.4%), profit attributable to owners of the parent of ¥160,000 million (+0.8%) and earnings per share of ¥119.65. The tanshin flags a forecast revision, but the accompanying note makes clear the change is an addition rather than an amendment — the company had previously published only a full-year outlook and is now publishing a first-half plan for the first time, with the full-year numbers to be reviewed when second-quarter results are announced. The new cumulative first-half guidance calls for net sales of ¥1,686,000 million (+13.4%), operating profit of ¥145,000 million (+34.9%), ordinary profit of ¥149,000 million (+40.5%), net profit of ¥89,000 million (+34.3%) and EPS of ¥66.13.

Set against those numbers, the first quarter is running ahead of a straight-line pace on the full-year plan: operating profit is 32.8% of the annual target, ordinary profit 34.5% and net profit 33.6% after three months of twelve. Against the newly published first-half plan, the implied second quarter is quieter — roughly ¥63,700 million of operating profit and ¥35,200 million of net profit, both below the first quarter's outturn.

Dividend forecast held at ¥44.00 after a ¥17.9 billion buyback

The dividend forecast was not revised. For the year ending March 2027 Asahi Kasei still plans an interim dividend of ¥22.00 and a year-end dividend of ¥22.00, for an annual total of ¥44.00 — ¥2.00 above the ¥42.00 paid for the year ended March 2026, which comprised a ¥20.00 interim and a ¥22.00 year-end payment. No first-quarter or third-quarter dividends are paid. The ¥29,912 million of dividends disbursed during the quarter represents the prior year's year-end payment.

Under the buyback authorised by the board on November 5, 2025, the company acquired 10,201,200 of its own shares, increasing treasury stock by ¥17,861 million during the quarter to ¥28,005 million at the quarter-end. Treasury shares stood at 19,513,914 against 9,311,227 at the March year-end, while shares issued were unchanged at 1,365,751,932; the weighted-average count used for earnings per share was 1,353,464,008 against 1,358,068,373 a year earlier. Beyond the six newly consolidated AiCuris entities there were no changes to accounting policies, estimates or restatements during the period. The quarterly consolidated financial statements were subject to a voluntary review by PwC Japan LLC, which reported no matters requiring modification.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.